DPR gives green light on government's premium replacement program

The House of Representatives (DPR) has given the government a green light with its plan to partially replace the sales of the highly subsidized Premium gasoline research octane number (RON)-88 with better quality RON 90 gasoline, in order to reduce the swelling fuel subsidy, Kompas reported Saturday.

However, the legislators asked the government to improve the technical aspects of the fuel replacement program so that it would not cause a problem when it was implemented.

Speaking to reporters following a closed meeting with senior officials of the Energy and Mineral Resources Ministry and the Downstream Oil and Gas Regulatory Body, BPH Migas in Jakarta Friday, the head of House's Commission VII Erlangga Hartarto said that the House members understood that such a program would be needed to ensure that the fuel subsidy which had significantly increased during the past several months due to the increase in the crude oil prices, could be reduced in line with the government's target.

According to the plan, the heavily subsidized RON 88 will be sold only to public vehicles and motorcycles. For private vehicles, the government will sell the better quality RON 90 gasoline.

He said that the government expected to further discuss the plan with the government early next year because details of the program had so far not been disclosed.

Earlier, State Minister for National Development Planning Paskah Suzetta said that the government's plan to replace the highly subsidized Premium brand gasoline would be implemented in early January 2008.

Meanwhile, the Directorate General of Oil and Gas said in the meeting with the House that the government in the initial stage targeted to cut fuel subsidies by replacing two million kiloliters of RON 88 with RON 90. (*)